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NBG increases core Tier 1 capital

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National Bank of Greece SA, the country’s largest lender, increased its core Tier 1 capital by approximately 302 million euros ($383 million) after repurchasing bonds and hybrid securities.

According to Bloomberg, the Athens-based lender on Jan.3 offered to buy back 1.5 billion euros of 3.875 percent covered bonds due in October 2016 as well as five series of preferred securities in euros, dollars and pounds. National Bank offered to pay 70 percent of face value for the covered bonds and 45 percent for the hybrids, which is below where they were issued and above where they were trading at the time.

Holders validly tendered securities with an aggregate nominal value of 753.3 million euros for securities denominated in the single currency, $47.5 million for dollar-denominated securities and 39.2 million pounds ($60.1 million) for sterling denominated securities, National Bank said in an e-mailed statement today. The settlement date for the purchases by the lender is Jan. 19.

Buying back debt at a discount to face value generates a gain in so-called core Tier 1 capital after Greek banks’ holdings of government bonds diminished this cushion against losses, sent stock prices plummeting and prompted depositors to move savings overseas. The government in Athens is negotiating a debt swap with bondholders to secure more international financing, which may further hurt lenders’ capital.
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